USPTO Director Proposes New Patent Eligibility Guidance

The test for patentable subject matter under Section 101 lies at the heart of patent system. However, very little guidance is provided in the actual statutory language. It comes as no surprise that the “seemingly’ simple provision of patent eligible subject matter has caused a great deal of confusion among inventors, patent attorneys, district court judges, and even the Justices on the U.S. Supreme Court.

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

35 U.S.C. § 101. The Supreme Court’s attempt to limit the scope of patentable subject matter by establishing three specific exceptions, laws of nature, physical phenomena, and abstract ideas, has created significant uncertainty for patent practitioners and examiners.

The USPTO has issued several guidelines in the past for determining patent-eligible subject matter to address such uncertainties. However, the examiners are still left with conflating aspects of 35 U.S.C. §§ 102, 103, and 112 with the § 101 analysis and expanding the “inventive concept” requirement. Recognizing the same, the USPTO Director, Andrei Iancu, recently proposed a change to how USPTO examiners determine whether a claimed invention satisfies the patent eligibility requirements of 35 USC § 101. On September 24, 2018, at the Intellectual Property Owners Association’s annual meeting, Director Iancu acknowledged that there is a growing consensus to promptly address the issue of patent eligibility subject matter. The premise of Director Iancu’s position is that there should be a strong line between “categories of invention on one hand” and “conditions for patentability on the other.” He stressed on the problems arising from the confusion in distinguishing between categories of invention under § 101 and conditions for patentability under §§ 102, 103, and 112:

“How can a claim be novel enough to pass 102 and nonobvious enough to pass 103, yet lack an ‘inventive concept’ and therefore fail 101? Or, how can a claim be concrete enough so that one of skill in the art can make it without undue experimentation, and pass 112, yet abstract enough to fail 101? How can something concrete be abstract?”

Director Iancu emphasized that § 101 is about subject matter, and that “it is meant to address categories of matter that are not ever eligible on their own, no matter how inventive or well-claimed they are.” He said that the Patent Office is considering revised guidance to help the examiners categorize the exceptions and on how to apply them. The following two clarifications to be addressed in the contemplated guidance, according to Director Iancu, “would help drive more predictability back into the analysis while remaining true to the case law that gave rise to these judicial exceptions in the first place”:

Categorizing the exceptions based on a synthesis of the case law to date, and

If a claim does recite a categorized exception, examiners would be instructed “to decide if it is “directed to” that exception by determining whether such exception is integrated into a practical application.”

Commenting on the judicial exceptions, Director Iancu noted that they should cover “only those claims that the Supreme Court has said remain outside the categories of patent protection, despite being novel, nonobvious, and well-disclosed.” The Supreme Court provided “basic tools of scientific and technological work” to categorize inventions that cannot be patented even where the applicant demonstrates full compliance with Sections 102, 103 and 112. Director Iancu defined “basic tools of scientific and technological work” as following

basic “methods of organizing human activity,” such as fundamental economic practices like market hedging and escrow transactions;” (citing Bilski and Alice) and

pure mental processes such as forming a judgment or observation, explaining that “something performed solely in the human mind can be thought of as abstract no matter how it is claimed.”

Director Iancu highlighted the proposed guidelines would be mostly directed to eligibility issues surrounding “abstract ideas,” and in particular guiding the examiners to determine when a claim recites or is “directed to” an abstract idea. He further revealed that the proposed PTO guidance would synthesize “abstract ideas” as falling into the following three categories*:

Mental processes, which are concepts performed in the human mind, such as forming an observation, evaluation, judgment, or opinion.

To “resolve a significant number of cases currently confounding our system,” Director Iancu said that the proposed guidance would highlight a new approach in which

“we would first look to see if the claims are within the four statutory categories: process, machine, manufacture, or composition of matter…If statutory, we would then check to see if the claims recite matter within one of the judicial exceptions…If the claims at issue do not recite subject matter falling into one of these categories, then the 101 analysis is essentially concluded and the claim is eligible.”

If the claims do contain subject matter recited in one of the excluded categories, more analysis will be done as instructed by the Supreme Court to decide whether the claims are “directed to” those categories. For that purpose, Director Iancu stated that “we must first understand what the line is that the court wants us to draw to decide whether the claim is “directed to” an excluded category or not. The proposed new guidance would explain that Supreme Court jurisprudence taken together effectively allows claims that include otherwise excluded matter as long as that matter is integrated into a practical application. The line, in other words, delineates mere principles, on one hand, from practical applications of such principles, on the other.”

Citing to Supreme Court decisions, Director Iancu highlighted that the court has repeatedly told us “an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection,” [in Diamond v. Diehr] and that “applications of such concepts to a new and useful end … remain eligible for patent protection” [in Mayo]. The proposed guidance would emphasize that the claim is not “directed to” the prohibited matter if the claim integrates the exception into a practical application. “In such cases, the claim passes 101 and the eligibility analysis would conclude. Otherwise, [the USPTO] would move to step 2 of Alice.”

Commenting on one of the main distinguishing features of the proposed guidance from the step 2 of Alice, to ensure a “meaningful dividing line between 101 and 102/103 analysis,” Director Iancu highlighted that “the first step of [the proposed] analysis does not include questions about “conventionality”…it does not matter if the “integration” steps are arguably “conventional”; as long as the integration is into a practical application, then the 101 analysis is concluded.”

In sum, Director Iancu stated that the proposed guidance for Section 101 will provide significant clarity by addressing step 1 of Alice and explaining “that eligibility rejections are to be applied only to claims that recite subject matter within the defined categories of judicial exceptions. And even then, a rejection would only be applied if the claim does not integrate the recited exception into a practical application.” The proposed guidance contemplates that conflating aspects of 35 U.S.C. §§ 102, 103, and 112 with the § 101 analysis would be minimized by going through the analysis in the figure below:

In closing remarks, Director Iancu restated the need for simplification and calls for other authorities to “join in helping us get out of the rut, at least by keeping rejections in their lane and by clearly categorizing the subject matter of any exception.” He also noted that if the revised new guidance were to be issued, it may take some time before it is finalized.

About

Seyfarth’s Life Sciences attorneys have a deep understanding of the biotechnology, chemical, pharmaceutical, and nanotechnology industries. We represent an international clientele of innovators and investors working with world-changing technologies. Our clients range from clinical-stage biotechnology companies and multinational pharmaceutical corporations to chemical and nanotechnology companies as well as start-up companies and venture capital firms.